SB 109

 26.211.45  101st Legislative Session  109
                                      2026 South Dakota Legislature
                                               Senate Bill 109
 Introduced by: Senator Howard
1 An Act to modify requirements to create a tax increment financing district.
2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
3 Section 1. That § 11-9-1 be AMENDED:
411-9-1. Terms used in this chapter mean:
5    (1)      "Department," the Department of Revenue;
6    (2)      "District," a tax increment financing district;
7    (3)      "Financing plan," the intended methods and revenue sources by which the political
8subdivision will pay for the project costs;
9    (4)      "Governing body," the board of trustees, the board of commissioners, or the
10common council of a municipality, or the board of county commissioners, or the
11common council of a municipality;
12    (4)      "Grant," the transfer of money or property to a transferee for a governmental
13purpose that is not a related party to or an agent of the political subdivision;
14    (5)      "Planning commission," a planning commission created under chapters 11-2 or 11-
156, a planning committee of a governing body of a political subdivision that does
16not have a planning commission, or the governing body of a political subdivision
17that does not have a planning commission or planning committee;
18    (6)      "Political subdivision," a municipality, as defined in § 11-6-1, or county of this
19state;
20    (7)      "Project plan," the properly approved plan for the development or redevelopment
21of a tax increment financing district including and all properly approved
22amendments to the plan;
23    (8)      "Tax increment financing district," a contiguous geographic area within a political
24subdivision defined and created by resolution of the governing body;
25    (9)      "Taxable property," all real and personal taxable property located in a tax
26increment financing district; and
                                                                                Underscores indicate new language.
                                                                              Overstrikes indicate deleted language.
 26.211.45  2  109
1    (10)     "Tax increment valuation," the total value of the tax increment financing district
2minus the tax increment base as determined pursuant to § 11-9-19.
3 Section 2. That § 11-9-5 be AMENDED:
411-9-5. To establish create a district, the governing body must adopt a resolution,
5    which is subject to a referendum under the provisions of section 11 of this Act, that:
6    (1)      Describes the boundaries of a the district with sufficient definiteness to identify
7with ordinary and reasonable certainty the territory included. The boundaries may
8not split a whole unit of property that is being used for a single purpose;
9    (2)      Creates the district on a given date;
10    (3)      Includes a finding that the assessed value of the taxable property in the district
11plus the tax increment base of all other existing districts does not exceed ten two
12and one-half percent of the total assessed value of all taxable property in the
13political subdivision; and
14    (4)      Assigns a name to the district for identification purposes. The first district created
15in each political subdivision must be known as "Tax Increment Financing District
16Number One, City (or Town, or County) of __________." Each subsequently
17created district must be assigned the next consecutive number.
18 Section 3. That § 11-9-8 be AMENDED:
1911-9-8. The resolution required by § 11-9-5 shall must contain the following
20    findings:
21    (1)      Not less than twenty-five fifty percent, by area, of the real property within the
22district is a blighted area or and not less than fifty percent, by area, of the real
23property within the district will stimulate and develop the general economic welfare
24and prosperity of the state through the promotion and advancement of industrial,
25commercial, manufacturing, agricultural, or natural resources development; and
26    (2)      The improvement of the area is likely to significantly enhance the value of
27substantially all other real property in the district; and
28    (3)      The review required by section 12 of this Act indicates that the social or economic
29benefits of the project exceed its costs to property owners and political subdivisions
30authorized to impose a property tax within the boundaries of the district.
31It is not necessary to identify the specific parcels meeting the criteria. No county
32    may create a district located, in whole or in part, within a municipality, unless the
33    governing body of the municipality has consented to creation of a district by resolution.
                                                                                 Underscores indicate new language.
                                                                               Overstrikes indicate deleted language.
 26.211.45  3  109
1 Section 4. That a NEW SECTION be added to chapter 11-9:
2No county may create a district located, in whole or in part, within a municipality,
3    unless the governing body of the municipality has consented to the creation of the district
4    by resolution.
5No municipality may create a district unless the board of county commissioners of
6    the county in which the district is located, either in whole or in part, has consented to the
7    creation of the district by resolution.
8 Section 5. That § 11-9-10 be AMENDED:
911-9-10. For the purposes of this chapter, the term "blighted area" means an area
10    that substantially impairs or arrests the sound growth of the political subdivision, inhibits
11    housing development, constitutes an economic or social liability, or is a danger in its
12    present condition and use to the health, safety, morals, or welfare of the public because
13    of:
14    (1)      The presence of a substantial number of substandard, slum, deteriorated, or
15deteriorating structures;
16    (2)      A predominance of defective or inadequate street layouts;
17    (3)      Faulty lot layout in relation to size, adequacy, accessibility, or usefulness;
18    (4)      Insanitary Unsanitary or unsafe conditions;
19    (5)      The deterioration of site or other improvements land or structures affixed to the
20land;
21    (6)      A diversity of ownership, tax, Tax or special assessment delinquency delinquencies
22exceeding the fair value of the land;
23    (7)      Defective or unusual conditions of title; or
24    (8)      The existence of conditions which that endanger life or property by fire and other
25causes; or
26    (9)      A predominance of open space with obsolete platting, diversity of ownership, or
27deterioration of structures or site improvements.
28 Section 6. That § 11-9-14 be AMENDED:
2911-9-14. For the purposes of this chapter, the term "project costs" are any
30    expenditures made or estimated to be made, or monetary obligations incurred or
31    estimated to be incurred, by a political subdivision that, which are listed in a project plan
32    as grants or costs of public works or improvements within a district, plus any incidental
                                                                                 Underscores indicate new language.
                                                                               Overstrikes indicate deleted language.
 26.211.45  4  109
1    costs diminished by any income, special assessments, or other revenues, other than tax
2    increments, received, or reasonably expected to be received, by the political subdivision
3    in connection with the implementation of the plan..
4 Section 7. That § 11-9-15 be AMENDED:
511-9-15. For the purposes of this chapter, the term "project costs" means:
6     (1)     Capital costs, including the actual costs of the construction of public works or
7improvements, buildings, structures, and permanent fixtures; the demolition,
8alteration, remodeling, repair, or reconstruction of existing buildings, structures,
9and permanent fixtures; the acquisition of equipment; the clearing, over-
10excavation, and grading of land, including use of engineered fill and soil
11compaction; and the amount of interest payable on tax increment bonds issued
12pursuant to this chapter until the positive tax increments to be received from the
13district, as estimated by the project plan, are sufficient to pay the principal of and
14interest on the tax increment bonds when due;
15     (2)     Financing costs, including all interest paid to holders of evidences of indebtedness
16issued to pay for project costs, any premium paid over the principal amount thereof
17because of the redemption of obligations prior to maturity, and a reserve for the
18payment of principal and interest on obligations in an amount determined by the
19governing body to be reasonably required for the marketability of obligations;
20     (3)     Real property assembly costs, including the actual cost of the acquisition by a
21political subdivision of real or personal property within a district, less any proceeds
22to be received by the political subdivision from the sale, lease, or other disposition
23of property pursuant to a project plan;
24     (4)     Professional service costs, including those costs incurred for architectural,
25planning, engineering, and legal advice and services;
26     (5)     Imputed administrative costs, including reasonable charges for the time spent by
27a municipal or county employee in connection with the implementation of a project
28plan;
29     (6)     Relocation costs;
30     (7)     Organizational costs, including the costs of conducting environmental impact and
31other studies and the costs of informing the public of the creation of a district and
32the implementation of project plans; and
33     (8)     Payments and grants made, at the discretion of the governing body, that are found
34to be necessary or convenient to the creation of a district, the implementation of
                                                                                 Underscores indicate new language.
                                                                               Overstrikes indicate deleted language.
 26.211.45  5  109
1project plans, or to stimulate and develop the general economic welfare and
2prosperity of the state. No payment or grant may be used for any residential
3structure pursuant to § 11-9-42Incidental costs diminished by any income, special
4assessments, or other revenues, other than tax increments, received, or
5reasonably expected to be received, by the political subdivision, in connection with
6the implementation of the plan.
7 Section 8. That § 11-9-23 be AMENDED:
811-9-23. If Except as provided in this section, if the municipality adopts an
9    amendment to the original project plan for any district that includes additional project
10    costs for which tax increments may be received by the municipality, the tax increment
11    base for the district shall must be redetermined pursuant to § 11-9-20. The tax increment
12    base as redetermined under this section is effective for the purposes of this chapter only
13    if it exceeds the original tax increment base determined pursuant to § 11-9-20.
14The provisions of this section do not apply if the additional project costs are thirty-
15    five fifteen percent or less than the amount approved in the original project plan and the
16    additional project costs will be incurred before the expiration of the period specified in
17    § 11-9-13.
18 Section 9. That § 11-9-32 be AMENDED:
1911-9-32. Moneys may only be paid out of the special fund only for the district
20    created under § 11-9-31 to pay project costs or grants of the district, to reimburse the
21    political subdivision for the payment of project costs or grants of the district, or to satisfy
22    claims of holders of tax increment bonds issued for the district.
23 Section 10. That § 11-9-46 be AMENDED:
2411-9-46. The existence of a district shall terminate must be terminated when:
25    (1)      Positive tax increments are no longer allocable to a district under § 11-9-25; or
26    (2)      The governing body, by resolution, dissolves the district, after payment or
27provision for payment of all project costs, grants, and all tax increment bonds of
28the district.
29 Section 11. That a NEW SECTION be added to chapter 11-9:
                                                                                 Underscores indicate new language.
                                                                               Overstrikes indicate deleted language.
 26.211.45  6  109
1If the estimated project costs of a proposed district are greater than fifteen million
2    dollars, the governing body creating the district must call a special election to determine
3    the question of the establishment of the district. The election must be held on a Tuesday
4    between forty-five and sixty days from when the governing body adopted the resolution
5    establishing the district.
6If the resolution is adopted within the ninety days prior to the political subdivision's
7    regular election or a primary or general election and with sufficient time to comply with
8    the subdivision's requirements for publishing notice of the election, the question must be
9    submitted to the voters at that election.
10A special election held pursuant to this section must be held upon the same notice
11    and conducted in the same manner as a regular election of the political subdivision.
12 Section 12. That a NEW SECTION be added to chapter 11-9:
13The governing body shall submit the project plan and financing plan for the district
14    to an independent, certified public accountant to provide:
15    (1)      A cost-benefit analysis of the project;
16    (2)      An estimate for the expected change in the distribution of property taxes over time
17resulting from the project; and
18    (3)      An estimate for the expected effects on employment, housing, and economic
19output resulting from the project.
                                                                                  Underscores indicate new language.
                                                                                Overstrikes indicate deleted language.